Wednesday June 24, 08:59 AM
Australia's Babcock & Brown loses 4.3 bn dlrs
MELBOURNE (AFP) - Collapsed Australian investment bank Babcock & Brown racked up losses totalling 5.4 billion dollars (4.3 billion US) in its final year of operations, it has been reported.
B&B, once Australia's second largest investment bank, became the country's highest-profile victim of the global downturn when it was placed in receivership in March.
The Sydney Morning Herald reported that figures yet to be lodged with Australian regulators showed it lost 5.4 billion dollars in its final year.
The report did not quote sources but, if accurate, it would mean B&B had recorded the third biggest loss in Australian corporate history.
B&B stopped trading on the Australian Securities Exchange (ASX) earlier this year with its shares worth little more than 30 cents each, a far cry from its peak in June 2007 when the stock hit 34.63 dollars.
At that time, B&B's strategy of going heavily into debt to buy assets then spinning them off into satellite companies that were charged hefty operating fees was delivering explosive growth.
The company had 1,600 employees and 32 offices worldwide, with assets ranging from wind farms in Spain to a telecoms firm in Ireland and an ethanol production plant in Australia.
It began to falter when credit markets dried up due to the US sub-prime mortgage crisis and in September last year the company posted a 24 percent fall in first-half profit, leading to chief executive Phil Green's resignation.
In February, it held a crisis meeting with its bankers and settled on a plan to sell the assets over two to three years through an operating company called Babcock & Brown International Pty Ltd (BBIPL).
However, the company's creditors were warned earlier this year to expect little relief from the asset sales, with proceeds destined to go to the banks that backed B&B.
Media giant News Corp. posted Australia's largest loss of 15.2 billion dollars in 2002. At the time it was an Australian-listed company but has since switched its listing to the United States.
Insurance and wealth management firm AMP (Berlin: AMP.BE - news) recorded the country's second largest loss of 5.4 billion a year later.
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